SECURED TRANSACTIONS

Introduction

Secured Transactions – Basic IdeaA person wants property (real or

personal) or services but does not have money. Person needs to become a debtor.

Secured TransactionsCreditor Options1. Refusal

Secured TransactionsCreditor Options2. Obtain promise to repay

Unsecured creditor General creditor

Secured TransactionsCreditor Options3. Obtain surety

Co-signer Accommodation party Guarantor

Secured TransactionsCreditor Options4. Obtain Collateral

Real property = mortgage or deed of trust

Secured TransactionsCreditor Options4. Obtain Collateral

Personal Property = Article 9 security interest

Basic Approach

1. Is the transaction within scope of Article 9?

Basic Approach

2. Classify the collateral.

Basic Approach

3. Determine if a security interest has been created, that is, has attachment occurred.

Basic Approach

4. Determine if the security interest has been properly perfected.

Basic Approach

5. Determine the persons who are making claims to the collateral.

Basic Approach

6. Apply proper priority rules and rules regarding repossession.

Very Brief History

Benedict v. Ratner – p. 756Hub Carpet RatnerDebtor Creditor

BenedictBankruptcy Trustee

Issue: Who has priority to the accounts receivable?

Loan of money

Accounts receivable as collateral

Pre-Code Security Devices1. The pledge

DR gives CR physical possession of the collateral.

Pros? Cons?

Pre-Code Security Devices2. Chattel Mortgage

360 Financial Services

Queensland, Australia

Pre-Code Security Devices3. Conditional Sale

Problem 262, p. 761

Pre-Code Security Devices4. Trust Receipt

Pre-Code Security Devices5. Factor’s Lien

Pre-Code Security Devices6. Field Warehousing